A salesperson has just spent the last half-hour telling you how great this big screen TV set is is, and once they have you convinced, they try to sell you an extended warranty. Sound contradictory? It is. Salespeople love to sell warranties for one reason; there’s big money to be made on them. In some cases, almost as much as on the products themselves.
So are warranties worth it? Research says no.
Fact: most defects will show up in the first year (standard manufacturer’s warranty period), making the extended warranty unnecessary.
Fact: extended warranties are usually offered by companies other than the manufacturer. So if they go out of business, you may be out of luck.
Fact: many credit cards will automatically double your warranty free of charge for up to an extra year when you pay using that card, making purchasing an extended warranty redundant.
And finally, you may still get stuck paying shipping if your equipment is sent away for repair.
- Check on the free extended warranty offered by your credit card provider or retailer and always check for excluded items. Additionally, certain retailers such as Costco automatically extend warranties on televisions, major appliances and computers, but exclude items such as tablets.
- Before purchasing, check the manufacturer’s warranty that comes with the product. A manufacturer’s standard warranty may vary from one to 5 years. In some cases, they may carry a lifetime warranty.
- Purchase brands with a good track record. Check out reviews of products and services online. Some reviews are fake so read them with caution. Last year, Canada’s competition bureau levied a $1.5 million fine against a telecommunications company for encouraging employees to post positive reviews for their products without disclosing their affiliation with the company (this is called astroturfing).
- Check for exceptions or limitations on warranties. Some warranties may only cover parts but not labour, while others exclude certain parts of the product. Items that are refurbished, may have a shortened warranty period (30 or 90 days) instead of the full warranty of a new product.
So unless you are extremely hard on equipment or will be lugging it around a lot (a laptop or digital camera), consider ditching the extended warranty.